Planners got conservative with bookings during the recession, but the recovery is here, and “everyone is blowing through their room blocks,” said Mike Dominguez, senior vice president, corporate hotel sales, MGM Resorts International, during a breakout session at the Financial & Insurance Conference Planners Education Forum in New Orleans June 18–20.
When that happens, and you need to add rooms because you’ve outgrown your block, those rooms might not come cheap. Here are the factors involved:
• North American hotels have seen record demand for nine consecutive months.
• There is still no new supply. Only two new hotels with at least 50,000 square feet of meeting space opened in the past five years.
• After a “lost decade” for international visitors to the U.S., that traffic is increasing and will continue to grow, especially now that there is a concerted effort to promote travel to the U.S.
• In 2013, 78 nights were completely sold out in North American cities. That’s 37 percent of all nights, and the percentage will be higher this year.
Takeaway: If you held back on your blocks for 2015, pull out thoseand take another look at the numbers.
“Tuesday Is the New Saturday”
That’s the other headline that could have been on this article. Dominguez pointed out that Tuesday night represented 60 percent of all room nights booked in 2013. So get away from the Tuesday/Wednesday pattern—or you will pay for it. “Monday, Tuesday, and Wednesday are where all the demand is today,” Dominguez said. “Flexibility will make a difference.”
Those were two of the new messages in Dominguez’s “state of the industry” presentation, a talk he’s been updating and delivering regularly since 2011. At the end of this month, he wraps up his term as chair of the International Board of Directors for Meeting Professionals International, and while his travel might slow a bit (he visited 35 MPI chapters in the past 18 months), he’ll still be on the speaking circuit aiming to transform planner/supplier negotiations into smart and straightforward business discussions.
One of his favorite examples of this, which we’ve reported more than once but which bears repeating, is for planners not to automatically ask for 10 percent off the F&B menu. “We have to stop doing the dance,” he said. “It comes down to trust.” Asking for 10 percent off means that the chef, who has accounting goals to meet, will have to find ways to cut the hotel’s expenses for the menu items you select. Better to give that chef your budget and have him or her build you a meal to maximize it.
The Rates Story
Average daily rate matches the peak of 2007 in raw numbers, but we are still $4 away from the peak in inflation-adjusted terms. With the strength in rates and hotel expenses increasing, Dominguez told planners that their meeting budgets may have to increase more than they think. “Go back and look at your 2007 budgets,” he said. “If you are not willing to pay, there is a client right behind you who is. Remember, you saved money over the past four or five years.”
If what you’re paying now is increasing at a faster rate than the Consumer Price Index, consider it as an average over several years—the higher increase now balanced against the savings in previous years.
Still Planning for “Ozzie & Harriet”?
Dominguez has added a social/cultural segment to his state of the industry talk these days, noting that the meetings world is not too quick on the uptake when it comes to adjusting to cultural changes. “We’re still providing for ‘Ozzie & Harriet,’ but our customers—and your attendees—are more ‘Modern Family.’”
Think about whether you need to “rebrand” or “reinvent” to address the following:
• Rather than paying for cable service, people subscribe to Hulu and Netflix. What does this subscription-based economy mean for meetings in terms of data dissemination?
• It’s an on-demand society. Your attendees are in control of what they want—and when and how they want it. That’s a hard thing for meeting planners to get their heads around, he said. “Someday we will be in a breakout room like this and we will not know what the content or the speaker will be until we get a tweet saying it’s Mike talking about the state of the industry.” So, the meeting planner will have booked the discussion space but attendees will have crowdsourced the topic and the speaker.
• There are four generations in the work and consumer space, and six generations at home. Their reference points are all different.
• Content is not king; context is. Attendees don’t need you for information; they need you to show them how to use the information, how to implement concepts in their lives.
Bottom line: “We need to experiment,” Dominguez said. “We need to think about doing things differently. Your audience and their needs are moving targets. Don’t be afraid of two-way dialogue.”